The provision of the Fixing America’s Surface Transportation Act (FAST Act) established to help the IRS collect unpaid federal tax, penalties and interest went into effect in March 2017.
Which taxpayers are affected? A taxpayer who has a delinquency of $50,000 or more in federal tax, penalties and interest, for which a notice of lien or levy exists, is considered a “seriously delinquent taxpayer” and falls under the FAST Act provision.
How does FAST allow for the denial or revocation of a U.S. passport?
If the IRS certifies a tax debt of a seriously delinquent taxpayer to the State Department, then the State Department can deny the taxpayer’s passport application or revoke or limit the use of the taxpayer’s U.S. passport.
The IRS, however, has not yet issued any regulations or guidance to clarify the procedures or implementation of the FAST Act provisions.
How quickly can a taxpayer’s U.S. passport be revoked or application denied?
The IRS is required to notify the taxpayer in writing of a certification to the State Department of the taxpayer’s seriously delinquent tax debt.
For existing passports, the State Department can immediately revoke the current taxpayer’s U.S. passport upon receipt of the IRS certification.
For new or renewal passport applications, the State Department will hold the application for 90 days. During the 90 days, the taxpayer can pay off the tax debt, enter into a payment plan or resolve an erroneous certification.
What if a taxpayer has an existing payment plan with the IRS?
If a taxpayer is making payments, in a timely fashion, under an existing payment plan, compromise or settlement agreement, then the IRS will not certify the debt to the State Department.
What if the taxpayer believes the IRS certification is erroneous? The taxpayer can file a suit with the U.S. Tax Court or U.S. District Court requesting that the court review the certification to determine its accuracy.
What if a taxpayer doesn’t travel internationally?
Beginning on January 22, 2018, domestic airlines can only accept drivers’ licenses that are compliant with the Real ID Act as a form of identification. Not all states are currently compliant. The alternative form of compliant identification is a valid U.S. passport.
To determine if your drivers’ license is compliant with the Real ID Act, go to the Department of Homeland Security’s website.
Where should a taxpayer with tax debt start?
A taxpayer with a $50,000 or greater debt to the IRS should work with a tax advisor or attorney to determine the validity of the tax debt.
If valid, then the debt should either be paid off or the taxpayer should contact the IRS about establishing a payment plan before the IRS certifies the debt to the State Department.